The Senate on Tuesday, December 8, passed a bill for an act to assist banks in the recovery of bad debts for second reading.
This came up after the adoption of a motion by the sponsor of the bill, Sen. Sani Musa (APC-Niger) during plenary.
Musa explained that the proposed law would help to recover past and due obligations without recourse to the borrower as well as provide penalties for breaches.
According to him, the essence was to enhance loan recovery in the Nigerian banking sector.
He added that the current situation in Nigeria demanded an injection of healthy bank credit and a recovery system that would effectively fasten the pace of growth in the financial sector.
The senator said: “It is unfortunate that every lending institution finds itself from time to time with loans of which the risk of loss is greater than anticipated.
” In every lending environment, there are two types of borrowers – the good and the bad. Before the deregulation of our banking system, the ability of our banks to recover loans has been the factor behind the collapse of many commercial banks.
“Today, the situation in Nigeria has become very serious and seemingly intractable and thereby frustrating our efforts as a nation towards a private sector-driven economy.”
He also stated that even though there was a subsisting court judgment that empowered banks to take back their money from bad debtors, the proposed legislation was necessary.
On his part, the Deputy Senate President, Ovie Omo-Agege who presided over plenary, directed the bill to the Senate Committee on Banking, Insurance and Financial Institutions for further legislative works to report back in four weeks.